European Strategic Autonomy: urgency, challenges, and opportunities

In a world of constant transformation, the European Union (EU) finds itself at a decisive crossroads. At a time when Chinese power is no longer a subject of debate and American protectionism is suddenly resurging, Europe is forced to deeply rethink its industrial, energy, and security foundations. Far from being an inevitability, this sudden awareness offers a historic window: that of moving from the slogan of "strategic autonomy" to a coherent, ambitious, and realistic policy, capable of making the EU a sovereign and resilient actor on the global stage. It is often said that the aging of the global population will be one of tomorrow's major issues. This is true! But the aging of the population is also somewhat a phenomenon of the past. This can be seen in a large number of indicators: increase in the median or average age, decrease in the share of young people in the population, increase in the share of older people, etc.

The Ransoms of Globalization

For decades, Europe has prospered thanks to open markets, trade, and resource sharing. The pursuit of low costs, expertise, and productivity gains, particularly aimed at optimizing supply chains, has allowed European industry to remain competitive. But this model proved particularly vulnerable in 2020, following the Covid-19 pandemic. Factory closures, logistical disruptions, shortages of medicines and semiconductors, soaring energy prices... all were warning signs of excessive dependence.  

Tensions intensified with the war in Ukraine, exposing the fragility of our gas and grain supplies, while soaring inflation eroded household purchasing power. The geopolitical costs of "outsourcing" have emerged as a new factor in the economic equation. Moreover, this has eroded European industry despite its importance in the continent's economic structure. Today, it represents 20% of its gross value added, but 80% of its exports and more than 30 million jobs.  

From now on, Europe must identify, within critical sectors such as health, agri-food, energy, defense, and advanced technologies, the links to be reshored or secured through reliable partnerships.

From awareness to legislative initiatives

Faced with these challenges, European institutions have accelerated their projects. The European Green Deal of 2020 not only set the goal of carbon neutrality by 2050: it also established the necessity of a sovereign energy transition, based on local supply chains and high value-added renewable energies. Following this, REPowerEU, launched in 2022, plans to mobilize 372 billion euros of investment by 2027.  
This plan institutionalized the reduction of dependence on Russian fossil fuels, while inviting member states to diversify their supplies and massively deploy solar, wind, and green hydrogen.

Among recent milestones, the European Chips Act of 2023 aims to promote the production of advanced semiconductors on European soil by supporting Research & Development and mobilizing funds from the Horizon Europe program and the Just Transition Fund. To do this, the EU plans to deploy 43 billion euros with the goal of increasing production capacity to 20% of the global market by 2030. The Cyber Resilience Act of 2024, associated with a budget of 4.5 billion euros, strengthens the EU’s digital resilience against attacks. The annual estimated reduction in costs related to cyber-attacks on European companies thanks to this new policy is estimated at 290 billion euros. Finally, the reform of the Common Agricultural Policy (CAP) of 2023 encourages sustainable agriculture and food security, with a budget of 387 billion euros, notably to support farmers in the transition towards responsible and resilient agriculture.  

At the budgetary level, NextGenerationEU and InvestEU have made more than 800 billion euros available for innovation, energy transition, and industrial modernization, placing strategic autonomy at the heart of national and European recovery plans.  

Beyond these sectoral and budgetary initiatives, a cross-cutting issue emerges: that of reindustrialization. European strategic autonomy could not be realized without the return of a solid productive base on the continent. This would involve rebuilding industrial supply chains in key areas — batteries, medical equipment, critical materials, electronics, energy infrastructure — in order to reduce systemic vulnerabilities. This dynamic would require a policy supporting innovation, a coherent public procurement strategy, and upgrading skills through training. The European Union should also address distortions of competition — which may arise from massive foreign subsidies or weaker social and environmental standards — by adapting its trade defense instruments. Reindustrialization is not only an economic imperative: it is a condition of sovereignty.

An unprecedented paradigm in defense matters

The temporary halt, at the beginning of 2025, of certain American arms deliveries to Ukraine came as a shock: Europe can no longer be dependent on external powers to ensure its security. The cumulative deficit in defense spending by member states, estimated at 1,800 billion euros since the end of the Cold War (compared to the NATO target of 2% of GDP), illustrates three decades of underinvestment that the current crisis redefines as a genuine strategic risk.

The figures speak for themselves: in 2024, Germany increased its defense budget by 44%, France by 15%, and Italy by 37% compared to 2023. The European Commission responded with "ReArm Europe," a five-part roadmap to unlock up to 800 billion euros in investments through budgetary flexibility, public-private partnerships, and instruments from the European Investment Bank (EIB). The stated objective: to create a European industrial and technological ecosystem, from innovation to production, specifically targeting areas such as drones, cyber defense, command systems, and hydrogen propulsion.

In this process, the establishment of structured cooperation under the PESCO framework (Permanent Structured Cooperation) and programs such as the European Defence Fund allows for sharing expertise, harmonizing standards, and achieving economies of scale, while preserving the decision-making chain within the EU. The challenge is clear: to have an autonomous operational capacity capable of protecting the entire continent without relying exclusively on Washington.

The European defense industry, a strategic economic lever

Investing in European defense means supporting a sector that, despite significant underinvestment since the end of the Cold War, is, according to our analysis, a potential driver of growth and innovation.  
The modernization of military capabilities requires long-term equipment programs — aircraft, ships, drones, air defense systems — generating recurring orders for manufacturers. This medium- and long-term visibility allows companies to plan their R&D investments and production chains, promoting economic stability and the creation of highly skilled jobs.  

The defense sector also has a ripple effect across the entire industrial value chain. Technologies developed for military needs — embedded artificial intelligence, composite materials, cybersecurity, electric propulsion — quickly find civilian applications, strengthening the competitiveness of advanced sectors. By supporting these projects, investors stimulate both the EU’s technological sovereignty and the diversification of manufacturers’ revenues, reducing their exposure to economic cycles.  

Often reduced to aerospace, the European defense industry nevertheless plays a key role both civilly and militarily. In 2023, it generated a turnover of nearly 159 billion euros, up 16.9% year-on-year, and employed around 581,000 workers within a dense network of 2,500 SMEs. Twelve European companies are now among the 50 largest global defense groups, according to the SIPRI ranking of December 2024, including five French firms.  

While the United States still dominates the arms market (more than 40% of global exports), France has risen to second place ahead of Russia, driven by geopolitical upheavals related to the war in Ukraine. Western European countries and the United States alone now account for 72% of global arms sales. In 2023, European military exports jumped 12.6%, reaching 57.4 billion euros.  

But what would be the real impact of developing the defense industry on European growth? It all depends on the nature of the expenditures made. If they are directed towards investment — notably in equipment or research — their multiplier effect on activity can be significant. However, if they replace other public spending or feed imports, their impact will be weaker. Finally, the beneficial effects on growth may take time to materialize, especially for heavy armament projects, whose benefits are only felt in the medium term.  

Moreover, consolidating production chains within the European Union offers opportunities for synergies and economies of scale. Pooling capacities at the supranational level, through collaborative projects (PESCO, European Defence Fund), simplifies procurement and streamlines industrial infrastructure. For investors, this translates into reduced duplication, better cost sharing, and improved operating margins.  

The current geopolitical context, marked by increased competition among great powers, strengthens the sector’s attractiveness. Member states are committed to raising their strategic ambitions and securing their military supplies, resulting in a significant increase in defense budgets. This trend offers private capital fertile ground to support large-scale projects, accompanied by guarantees and public-private partnerships, under favorable contractual conditions.  

Finally, strengthening European defense capabilities helps foster the emergence of an integrated industrial ecosystem, capable of responding quickly to crises and offering sovereign solutions. The goal is twofold: to generate sustainable financial returns while enhancing the continent’s resilience and security.

The levers of citizen and private mobilization

The success of this bet rests on three pillars according to us: political commitment, private investment, and citizen support. Member States must continue to harmonize their standards, simplify regulations, and align their tax systems to avoid fragmentation of the single market. The private sector, for its part, is encouraged to innovate through partnerships with public research centers and deeptech startups, while European institutional investors — banks, pension funds, insurers — are called upon to finance strategic infrastructures.

Civil society, finally, must be involved at every stage through consultation and transparency processes: decisions regarding agri-food, energy, or cybersecurity affect the future of citizens and require impeccable democratic legitimacy. The challenge is not only economic or military; it is also societal: strategic autonomy must assert itself as a unifying project, combining power and values.

Upcoming perspectives and challenges

The path towards European strategic autonomy constitutes a challenge. Economic and political divergences between member states can slow down decision-making, and international competition, notably with the United States and China, is intensifying on all fronts. However, the momentum is real. The immediate future poses two requirements: maintaining the pace of investments—both public and private—and deepening industrial integration, particularly in electronic chips and robotics. The coming years must also allow for measuring the actual impact of the initiatives launched: reduction of critical imports, market share in strategic sectors, and the operational readiness level of common forces.  

The challenge of European strategic autonomy is no longer a mere slogan but a true political compass. It involves combining economic power, energy resilience, technological sovereignty, and military strength, while preserving the unity and fundamental values of the Union. To achieve this, the EU must transform its legislative ambitions into tangible achievements, mobilize all vital forces, and make every crisis a catalyst for progress. Furthermore, a coherent and targeted industrial policy could generate growth, preserve employment, and succeed in the climate transition. Industrial policy is indeed key: it touches many other policies such as trade, the internal market, research and innovation, employment, and environmental protection.  

In an era of geopolitical uncertainties, Europe has the opportunity to become a credible counterweight, not by retreating, but by strengthening itself. Strategic autonomy should, in our view, be presented as an ambition, an opportunity to shape the Europe of tomorrow.